Saved Bookmarks
| 1. |
a company sets aside a sum of rs.5000 annually for 10 years to pay off a debentures issue of rs.60,000. if the fund accumulated at 5% per year compound interest , fund the surplus full redemption of the debentures issue? |
|
Answer» ong>Answer: If a company purchases assets from its suppliers or vendors, then instead of paying them in cash the company issues debentures to them. This is known as issue of debenture for consideration other than cash. The issue of debenture for consideration other than cash serves the PURPOSE of both the vendor as well as of the purchaser (company). From the purchaser’s point of view, purchasing an asset against the issue of debentures REQUIRES no additional cost for raising loans or arranging funds immediately. On the other hand, the vendor gets interest on the AMOUNT of debentures RECEIVED. In this case, payment is deferred by issue of debentures and interest is paid for time lag payment. Debentures may be issued at PAR, premium or discount to the vendor.. |
|